The Pre-Turnover Amendment of the Governing Documents

Hello,

Is there a regulation that forbids a law firm from removing references to membership approval from the Governing Documents of a HOA at the time that it amends (without membership approval) the Governing Documents on behalf of the Developer just before the turnover from the Developer to the Membership? Also, is there a regulation that prevents the same law firm from acting on behalf of both the Developer and the Board of the Association because of conflict of interest? I know of an instance in which the law firm for the Board of the HOA performed (without membership approval, because it was acting on behalf of the Developer [the Declarant]) the major amendment to the Governing Documents that occurs when the HOA is turned over from the Developer to the Members. In this process, this law firm removed from the Governing Documents (without membership approval) some key references to membership approval and diluted other references to membership approval in order to to give its client (the Board) free reign to do what it wanted to do without membership approval. In doing this, it transfered to the Board (its client) the decision-making authority that the Governing Documents clearly had given to the membership. Does anyone know anything about this kind of situation?

Jim

Jim,
You are still in the Developers ball park and he can make up the rules as he goes along.

What wording did he remove? Some references to membership prior to the turnover is just useless AFTER the turnover so perhaps what is removed was in reference to class membership, which changes AFTER the Developer is gone anyhow.

There is no conflict of interest when the lawyer represents both the Association and the Developer. That is a normal scenerio but your membership can at anytime after the turnover, possibly consider a change in representation. It depends on what kind of a job he is doing and has done in regards to the membership. Once the Developer is gone, fire him if the Board and members desire.

NOW!!! If there are parts to your Documents that are being changed and the membership does not approve or wants additions to the Docs, you can request that the Developer add them. HE CAN DO SO WITHOUT A VOTE FROM THE MEMBERS.

Apparently your current Board was appointed by the Developer? Have an election and vote for a change if you feel that this Board is not acting in the best interests of the community. It's all in the memberships power to do what is best for all of the owners.

Susan,
How'd we do that? Maybe Mom likes me best

Hi Mary,

Mary:

Have your thoroughly researched your gov docs to see exactly what powers the developer (declarant) has while the assn is under his control? Specifically, does he have the right to amend the CCRs w/o a vote of the members? If so, then these actions are perfectly legal. Incidentally, it's not the attorney who is instigating these changes; it’s the declarant and the BOD.

Jim:

The turnover occurred a decade ago. In the original Documents, the Declarant appears to have had carte blanche to amend the Documents. The Declaration originally stated that the membership approval requirement for Document amendment was subject to the rights of the Declarant, who reserved the right to amend the Declaration in any manner whatsoever.

When the turnover occurred, a lot of language in the Documents became obsolete and needed to be deleted or changed as a matter of routine procedure. It appears to me that the Declarant gave the Law Firm the responsibility of carrying out this routine procedure, and that during the course of fulfilling this duty, the Law Firm snuck in some additional, unjustified alterations (regarding membership approval) on behalf of its other client (the Board) that the Declarant never intended, just as Congress sneaks in earmarks. This is what I mean by a conflict of interest in the same Law Firm whose client is the Board performing a duty for the Declarant which effects its client (the Board).

Jim:

What I DON’T understand is the logic of the Declarant giving the membership lots of approval authority in the Documents before the turn-over date but then changing the Documents to take away that approval authority just before the turn-over date in preparation for the turn-over.

What I DO understand is the logic of the Law Firm taking advantage of its role in the routine pre-turn-over amending the Documents on behalf of the Declarant to go beyond what the Declarant asked by limiting membership approval authority in order to give its client (the Board) more freedom to ignore the membership than what was originally stated in the Documents or intended by the Declarant.

However, based on what I’m reading in this thread, even if the Law Firm pulled a fast one on behalf of its client (the Board) while performing an amendment duty for the Declarant, the fact that the Law Firm was performing this duty for the Declarant, who was free to amend the Documents in whatever way he chose, made whatever unjustified alterations the Law Firm snuck in during the performance of that duty legal.

Jim

Hi Mary,

Mary:

How do you know the law firm added other things to the amendment?

Jim:

As I said, “it appears to me” that it added its own items to the amendment, because “I don’t understand ... the logic of the Declarant giving the membership lots of approval authority in the Documents before the turnover date but then changing the Documents to take away that approval authority just before the turnover date in preparation for the turnover,” whereas “I do understand ... the logic of the Law Firm taking advantage of its role in the routine pre-turnover amending [of] the Documents on behalf of the Declarant to go beyond what the Declarant asked by limiting membership approval authority in order to give its client (the Board) more freedom to ignore the membership than what was originally stated in the Documents or intended by the Declarant.”

It is more logical that the Law Firm would consistently try to place the membership at the mercy of its client (the Board) than it is logical that the Declarant would become schizophrenic and go from one extreme of originally giving the membership lots of approval authority in order to keep the membership from being at the mercy of the Board to the other extreme of withdrawing that approval authority.

Mary:

Perhaps the declarant was in agreement to these additions. He would have had to sign the amendment because he was still in control, right?

Jim:

As I said, “It appears to me that the Declarant gave the Law Firm the responsibility of carrying out this routine procedure” of a pre-turnover amendment of the Governing Documents in preparation for the turnover and that the Law Firm took advantage of the situation on behalf of its client (the Board). The only one who benefits from the withdrawal of the membership approval requirement is the Law Firm’s client (the Board). The Declarant does not benefit.

There were a lot of changes listed in the certificates of amendment, and the Declarant could easily have overlooked a few additional changes, especially if he was relying on the Law Firm to handle the details, as people usually do when using attorneys to draft a document. People usually do not try to be their own lawyer and to supervise the lawyer on whom they rely to perform a legal function. They usually just rely on the lawyer. Sometimes lawyers take advantage of that trust. I think that this is what happened. It’s the only thing that makes sense to me.

Why would the Law Firm take advantage of the Declarant’s trust? In order to give its CLIENT (THE BOARD) an advantage. A Law Firm taking advantage of the Declarant’s trust is not at all hard to believe when there is such a conflict of interest. It is not surprising that the Law Firm would try to give its client (the Board) an advantage when performing a legal function for the Declarant. That is why the Declarant should not use the Board’s attorneys.

Jim